Nifty outlook: Primary uptrend intact, but stay cautious for now

The broader range of the market is still likely to remain intact and it would be important to continue protecting profits at higher levels.

Along with significant improvement in market breadth, the domestic equity market recovered over 120 points from the low point on Wednesday and ended the day with decent gains. Wednesday’s session saw rangebound and subdued trade in the first half, but market breadth improved and short covering occurred at lower levels in the last two-and-a-half hours of trade.

The Nifty50 saw over 120-point spurt and ended the day, gaining 82.40 points, or 0.73 per cent. We will enter Friday’s trade after a gap of one day; Thursday being a trading holiday on account of Ganesh Chaturthi. As we approach next session of trade, two factors are working in favour of the domestic markets; one, we do not have any apparent negative cues to deal with, and secondly, the buoyant Asian markets.

Unless we have fresh overnight negativity to deal with, this may lead to a positive start to trade on Friday.

While we expect a follow-through at least in initial trade, the 11,410 and 11,465 levels will act as an immediate resistance level. Supports will come in at 11,250 and 11,210 levels.

The Relative Strength Index, or RSI, on the daily chart stood at 45.4649 and it was neutral showing no divergence from price. The daily MACD stays bearish as it trades below the signal line. On the candles, a long lower shadow occurred. This is typically a bullish signal, if it occurs after any downtrend.

Pattern analysis shows after running away much ahead of its curve following a breakout, the Nifty50 has reverted to its mean. It has currently managed to hang on to its 50-DMA support and the upward rising trend line support that follows soon after that.

We are most likely to see a positive opening and some follow-up rally in initial trade. However, the broader range of the market is still likely to remain intact and it would be important to continue protecting profits at higher levels. Unless a bottom is established in the immediate short term, all upward moves should be utilised to protect profit, while all corrective downsides should be utilised to make value purchases.

With the primary uptrend remaining intact, a cautiously positive approach is advised for the day.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)